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D-Day For Wall Street

#1: D-Day For Wall Street

Next week, the largest banks reveal just how bad it is out there. What’s the trade ahead of earnings from Citibank (C), Merrill (MER) and more.

CNBC’s Charlie Gasparino joins the panel for this conversation. Following is a synopsis of his main points.

Citibank

My sources tell me that Citibank will receive an infusion of $15 billion from a consortium, says Gasaprino and I think that’s why the stock is up. Now two questions are left- how many layoffs will come and how big will the write-down be? I suspect on Tuesday we’ll know a lot more.

Merrill

I’ve been saying for months that Merrill will take a $12 billion write-down for the quarter, says Gasparino. That means total write-downs could be as high as $20 billion.

Is there a trade here?

I would rather own MER than C says Guy Adami.

“Amen,” adds Jeff Macke.

Or you could buy Citigroup stock and sell the calls against it, says Pete Najarian.

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#2: Miserable Macworld?

Apple (AAPL) is down 12% in 2008 ahead of their usually amazing Macworld conference, next week. Will new product mojo boost shares?

I think Apple has been slaughtered over the last 2 weeks, says Pete Najarian. Personally, I like this stock.

The normal move out of Macworld is 8%, he adds. If you believe Macworld could be a catalyst for the stock, I recommend you buy the 180 call and sell the 185 call he counsels.


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#3: War Chest Winners

With the new defense budget due next month who are the likely war chest winners?

I think the best defense companies in the world are located right here in the United States. In the space I like Lockheed (LMT), Raytheon (RTN) General Dynamics (GD) and L-3 Communications (LLL) says Guy Adami.

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Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! Prefer to keep it between us? You can still send questions and comments to fastmoney@cnbc.com.

Trader disclosure: On Jan 11, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Macke Owns (YHOO), (INTC): Najarian Owns (BIIB), (C), (CSCO), (MCD), (MSFT); Najarian Owns (AAPL) Options, (CFC) Options, (VLO) Options, (YHOO) Options, (WM) Options: Finerman Owns (GS); Finerman's Firm Owns (YHOO), (DSW), (WMT); Finerman's Firm Owns (LEH) Puts; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns (CROX) And (CROX) Options; Finerman's Firm Is Short (IYR), (IWM), (SPY)

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